Vintage Wine Estates CMO on Potential Lasting Impacts from COVID-19

Dear Client: 

We’ve been pretty focused on the high-level impact of the COVID-19 pandemic on all three tiers. Today, we’ll get closer to the ground and look at things from Vintage Wine Estates’ perspective.

Yesterday, your editor spoke with VWE cmo Jessica Kogan to discuss the impact she’s seeing and how VWE is responding so far. 

“It’s so horrible what is going on. It’s scary. But through this we’re also going to see a lot of innovation and we’re going to see a lot of change, which I think is going to be very positive,” Jessica tells WSD. 

BOOSTING ONLINE PRESENCE. With tasting rooms closed, many consumers are turning to ordering their wine online.

“I definitely think the smaller wineries absolutely now have to pay attention to their online presence and/or have an online presence,” says Jessica. 

While tasting rooms and wine clubs are important, “your customer is much more dynamic,” says Jessica. “Our job is to be everywhere the customer wants to be in a way that is meaningful and impactful to them.”

Three years ago, VWE “implemented a true omni-channel strategy to bring the tasting room online,” according to Jessica, which includes the wine club, a strong e-commerce presence, and supported retail distribution. “For us, each channel is as important as the next.” 

DID WILDFIRES HELP PREPARE? When asked if the California wildfires in recent years have helped prepare them for other disasters, Jessica said, “yes, because of the fires we do have emergency plans of action. We do know immediately how we need to shift.”

She added the issue with the fires was that the warehouse was impacted too, not just the tasting room. In this case, warehouses aren’t impacted and VWE is considered an essential business (more on that below), meaning they can still ship product. “That makes a huge difference.”

TAKING THE OPPORTUNITY TO CONNECT WITH CONSUMERS. For VWE, their tasting rooms include exclusive wines. Now, they’re taking those exclusive wines and making them available for consumers to enjoy at home. 

“We’re building samplers and sets so that customers can do their own flights in their own house,” she says. “We’re also doing Facebook Live meet ups for our individual brands, where customers are invited to taste wines with us.” 

“The idea here is that the majority of customers are in shelter – not that they all have in-shelter orders, but a lot of people are staying home,” she continues. “It’s gonna get boring. There’s only so much Netflix you can watch. So what we’re trying to do is take this opportunity to connect with our customers.”

VWE plans to start Facebook Live at the end of this week. Jessica expects that to do well and “I think it’s going to perform how we want it to perform – as an add-on. It’s not what drives our marketing, but just as a way to connect and support our customers.”

LOOSENING REGULATIONS. We’re also “seeing a lot of loosening on regulation right now – which is absolutely appropriate,” she says. 

“A lot of it has to do with the fact that a lot of those regulations are well meaning and in a different context in time, it does prevent a lot of bad stuff,” says Jessica. “But right now we’re living in unprecedented times and the regulations don’t necessarily make sense when a whole country is trying to pivot in a new way of doing things…”

“It’s so hard to know what the future is because we have no idea how long this is going to last, but I do think that there will be some permanent shifts that are the result of this new way of being and living.”

CALIFORNIA & NEW YORK ISSUE STATE-WIDE STAY-AT-HOME ORDER

New York joined California this morning as the second state to install a stay-at-home order. The restrictions will start on Sunday.

California’s stay-at-home order was announced late Thursday, as sister publication Beer Business Daily covered earlier this morning. 

While New York Gov. Andrew Cuomo does not label it a “shelter-in-place” order, the changes in New York City are modeled after those put in place in northern California, reports CNBC. 

The new restrictions will require all non-essential workforces stay home and people must be at least six feet apart from each other when in public, avoid public transit as much as possible, and limit outdoor time to solitary activities.

Food delivery is still considered essential. Other essential services include grocery stores, banks, pharmacies and cannabis shops. Any non-essential businesses that do not close will face a fine for noncompliance. 

New York declared the entire three tier system as essential “and therefore exempt from the rule,” according to the Metropolitan Package Store Association.

Governors of both states were frank when speaking about the current plan. 

“When I talk about the most drastic action we can take, this is the most drastic action we can take,” said Gov. Cuomo. “These provisions will be enforced. These are not helpful hints. This is not if you really want to be a great citizen. These are legal provisions.”

Similarly, California Gov. Gavin Newsom said, “We need to bend the curve in the state of California,” per a separate article from CNBC. “Home isolation is not my preferred choice … but it is a necessary one.”

Both California and New York have not set specific end dates for the stay-at-home orders.

Illinois may be next with reports surfacing that it may take similar measures later today, per NBC.

‘ESSENTIAL’ BUSINESSES STILL UP AND RUNNING, BUT CONFUSION AROUND WHAT’S ‘ESSENTIAL’

As states shut down non-essential businesses, many are left wondering what constitutes an essential business. 

The OC Register reported earlier this week that lobbyists for giant consumer brands from Anheuser-Busch to Target have banded together to petition all levels of government for both clearer rules, and exemptions. 

More than “four dozen industry groups,” including the Beer Institute and the Distilled Spirits Council are asking the Trump Administration as well as local governments “to set a clear framework for consumer goods makers, food processors, distributors and their workers to prevent shortages.” 

They’ve sent letters “asking for clarity on the types of businesses that are exempt from gathering bans and curfews enacted to slow the spread of COVID-19.” 

The BI provided sister publication Beer Business Daily with a copy of the letter. It explains that while the CDC gathering ban exempts businesses, state and local interpretations have not been as clear.

“Some states have clearly exempted food, beverage, and consumer packaged goods manufacturing facilities…while others have not. This lack of uniformity is leading to significant confusion and could further deteriorate if a level of consistency across states and municipalities is not achieved quickly.”

As manufacturing facilities are not areas of “public gathering,” but rather highly regulated businesses, the group is asking all levels of government to exempt consumer packaged goods manufacturers from curfew and gathering restrictions, “so that we can ensure the continued supply of food, essential items, while also ensuring worker safety.”

They also asked that the “manufacturing and transportation of ingredients, packaging, warehouses, distribution centers and other indispensable parts of the supply chain be considered equally critical.” 

You may recall, the Wine Institute said earlier this week that wineries are considered essential businesses in California [see WSD 03-17-2020]. 

CHARITABLE DONATIONS ABOUND AMIDST PANDEMIC

When things get bad, it’s reassuring to see companies and people stepping in and helping out. Indeed, news of charitable donations from industry members to help mitigate the impact of COVID-19 has flooded our inbox this week. 

Here’s a look at what some industry members have announced: 

  • J. Rieger & Co. repurposed overproof gin to make disinfectant; packaged hand sanitizer in small bottles; available at the distillery on a pay-what-you-can scale.
  • Spirit Hound Distillers and Green Goo packaging delivered donated hand sanitizer to local communities in need on Tuesday to help protect and support local emergency services and healthcare workers. 
  • Zamora Company will donate 400,000 euros to different associations to work proactively supporting the most disadvantaged groups in society in Spain. 
  • Gallo’s new Amsterdam Vodka and Barstool Sports are working together to help raise funds for bartenders affected across the country. They created a new t-shirt highlighting “Support Your Local Bartender” platform. 100% of the net proceeds will go to the US Bartenders Guild Foundation’s COVID-19 Relief Campaign. Additionally, New Amsterdam will donate $5 for every shirt purchased. 
  • Michter’s and Philip Duff donate $10,000 to COVID-19 relief campaign of the USBG national charity foundation. 
  • Diageo has pledged $1 million to the USBG Bartender Emergency Assistance Fund. 
  • Winemaker Josh Phelps and Grounded Wine Co. will donate 10% of sales to Redwood Empire Food Bank in Santa Rosa. 
  • Members of the Washington Distillers Guild have converted their operations to make thousands of gallons of hand sanitizer for supply to the health care chain. 
  • Beam Suntory and Southern Glazer’s Wine & Spirits are donating $1 million to the USBG Foundation Emergency Assistance Program and the Restaurant Workers Community Foundation. 
  • Beam Suntory is also working with its other distributors across various states, including Major Brands, Badger Liquor, Fedway Associates Inc., Allied Beverage Group, Empire Distributors, Best Brands and Horizon Beverage Group to provide donations to local organizations that will further help support the trade in their respective communities.
  • Pernod Ricard USA to produce hand sanitizer at all of its manufacturing sites and donate bottles. 
  • Copper Bottom Craft Distillery to make and distribute hand sanitizers free of charge. 
  • J. Wray and Nephew will donate 100,000 liters of high-strength alcohol to be used as a sanitizing and cleaning agent. 
  • Jameson will be donating $500,000 to support the US Bartender’s Guild charity. 
  • Bacardi helps produce hand sanitizers with change in production. 
  • St. Helena’s Heitz Cellars plans to pay staff salaries in full indefinitely, as well as donating an estimated $10,000 of beef to local charity partners.  

Until Monday,
Sarah

“We must let go of the life we have planned, so as to accept the one that is waiting for us.” – Joseph Campbell     

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